OLD MISSION TOWN MIRRORS CALIFORNIA'S VAST PROBLEMS

The spirit of old California still fills this classic 18th Century mission village, a carefully preserved symbol of frontier optimism built squarely atop the San Andreas fault.

At least 4,300 Spanish, Mexican and Indian settlers are buried in unmarked graves in the cemetery adjacent to the parish church, built in 1797. It is the oldest of 21 Roman Catholic missions still remaining from California's Spanish era.

The church sits on the town square, across from the pioneer stable, jailhouse and the landmark Plaza Hotel-all protected against encroaching development since 1933, when most of this agricultural town of 1,650 some 45 miles south of San Jose became a state historic park.

But nothing in San Juan Bautista's history could protect it against fiscal woes plaguing so much of modern California.

Discovering last year that the town was deeply in debt and unable to meet its payroll, it opted for shock therapy. It fired its six full- and part-time employees, including the two-man police force, and enlisted volunteers to provide a host of city services.

Thus Pimi Rodriguez, the town's one-man public works department, went on reading water meters, but this time without pay. And former City Council member Anthony Botelho, 80, and longtime ex-mayor and councilman Leonard Caetano, 69, patched potholes, helped by Rodriguez and his 80-year-old father, E.B.

City Treasurer George Rowe volunteered to answer phones at City Hall. And so on, until somehow San Juan Bautista struggled through its budget woes, but in the process becoming a much-chronicled symbol of the fiscal nightmare descending on California.

Now it's budget time again in California, and counties and municipalities across the nation's most populous state are bracing.

Still reeling from a stubborn recession that has slashed revenues and from last year's fiscal fiasco, when the state went 63 days without a budget and paid its bills in IOUs, officials across California warn that this time could be worse.

Besieged Republican Gov. Pete Wilson, whose approval ratings last week were the lowest of any governor in 30 years, has proposed to shift $2.6 billion in property tax proceeds from counties and municipalities to education to help meet a projected $10 billion budget shortfall.

Wilson has called for a two-year spending plan that would provide a balanced budget by the end of his term in early 1995 through $1.1 billion in deficit spending, with deep cuts in health and welfare services for the poor but protection for basic education and prisons.

The proposals have Democrats on the spot. They may have to call for higher taxes, a widely unpopular move, if they want to preserve health and welfare programs.

California's Senate last week passed a $51.6 billion budget at odds with Wilson's proposal. But the plan is expected to change substantially in negotiations with the state Assembly as lawmakers work to send a budget to the governor by the June 15 deadline.

Meanwhile, local officials from Eureka to San Diego are preparing steep cuts in their own budgets for services from police and fire protection to libraries and parks. Their warnings center on public safety, the top concern of Californians today next to jobs.

In Los Angeles County, Sheriff Sherman Block announced he would close four jails and release 5,000 of the county's 21,000 inmates because of an $850 million county shortfall of state funds.

Block also proposed laying off 1,600 of the county's 7,300 deputies. He relented somewhat after county supervisors, facing their own $1.45 billion budget deficit, agreed to provide $4 million to keep 400 deputies and civilian employees on the payroll and leave open three of the jails.

In Alameda County in the San Francisco Bay area, Sheriff Charles Plummer may have to lay off one-fourth of his 1,300 deputies.

The state's nine-campus University of California system also is in crisis, facing budget cuts for the fourth straight year.

UC Berkeley Chancellor Chang-Lin Tien caused a furor last month when he said the university would have to cut 335 courses and sections, including classes in beginning Spanish, and suspend some graduate program admissions. Fearing even worse cuts, Tien threatened to resign.

These are worst-case scenarios, of course, and officials annually trot them out just before the budget axe.

Wilson, in a swipe at public safety officials who share his conservative law-and-order bent, has denounced what he described as "poor-mouthing."

The governor has called for a statewide election this November to let voters decide whether to raise county sales taxes up to an additional penny for each $1 in purchases to offset the proposed $2.6 billion shift in state revenues to education.

"For any district attorney or board of supervisors to poor-mouth and say we don't have the money to keep our people safe is a total cop-out," Wilson told reporters in Sacramento earlier this month. "They need simply to have the guts to let the people decide. How much courage does that take?"

Since then, with the polls against him, the governor has backed off, leaving open the possibility of extending the state's current half-cent sales tax beyond its June 30 deadline.

State Treasurer Kathleen Brown, seen as a likely Democratic challenger to Wilson in the 1994 elections, backs a three-year sales tax extension as she steps up her criticism of the governor.

She assails Wilson's budget plan as being overly optimistic and accuses him of not counting $1.5 billion in off-the-book loans to local school districts against the budget in order to disguise the magnitude of the state's deficit.

In the end, though, there are no easy solutions. "Higher education is going to have to take cuts. Cities are going to have to take cuts," Brown said in a recent breakfast with reporters in Los Angeles. "That's the new reality."

Part of the new reality, in California as elsewhere, is that voters don't want their services cut but also don't want to pay the taxes for government to keep providing them.

Back in San Juan Bautista, City Manager Russ Carlson is readying to hand over the reins to successor Dennis McDuffie this week. Carlson, a consultant from Southern California, was brought in last year on a contract basis to clear the town's books.

In nine months, the town had repaid its debts. Last month, Carlson was able to submit a balanced budget for next year.

The town slowly has begun hiring back some employees, beginning with part-time librarian Yvonne Monito and Pimi Rodriguez, the one-man public works department who never shut down.

Now, even if the state funding cuts come-the town stands to lose perhaps $30,000-people here are ready.

"We're prepared to take it because we dealt with the most drastic cuts already, we already felt the pain," said Mandy Brown, 39, a former legislative aide in Sacramento who volunteered to serve as assistant city manager for the last nine months.

Ex-mayor, councilman and pothole-filler Caetano, looking out at his native town from his real estate office, beamed with satisfaction at how his neighbors coped but said he doesn't like the way the state does its business.

"Too many give-away programs and not enough money coming in. It just got out of hand," he said. "And it filtered down to tiny towns like San Juan Bautista."